To provide governments with better accounting guidance and consistency, GASB Statement No. 49, Pollution Remediation Obligations, identifies the circumstances under which a governmental entity would be required to report a liability related to pollution remediation.

According to the statement, a government would have to estimate its expected outlays for pollution remediation if it knows a site is polluted and any of the following recognition triggers occur:

1. Pollution poses an imminent danger to the public or environment and a government has little or no discretion to avoid fixing the problem

2. A government has violated a pollution prevention-related permit or license

3. A regulator has identified (or evidence indicates a regulator will do so) a government as responsible (or potentially responsible) for cleaning up pollution, or for paying all or some of the cost of the clean up

4. A government is named in a lawsuit (or evidence indicates that it will be) to compel it to address the pollution

5. A government begins to clean up pollution or conducts related remediation activities (or the government legally obligates itself to do so).

Liabilities and expenses would be estimated using an "expected cash flows" measurement technique, which will be employed for the first time by governments. Statement 49 also would require governments to disclose information about their pollution remediation obligations associated with clean-up efforts in the notes to the financial statements.

"This standard improves financial reporting by promoting better, more transparent and comparable information brought about by clearer and consistent accounting," said Robert Attmore, chairman of the GASB. "Statement 49 enhances the ability of financial statement users to assess a government's obligations by requiring both earlier reporting of obligations and recognition of obligations that may not have been reported before."

Statement 49 will be effective for financial statements for periods beginning after June 15, 2007.